Which Combination of Bond Characteristics Causes a Bond to Be

question 11

Multiple Choice

Which combination of bond characteristics causes a bond to be most sensitive to changes in market interest rates?
I. low coupon rates
II. high coupon rates
III. short time to maturity
IV. long time to maturity

• A)III only
• B)I and III only
• C)I and IV only
• D)II and III only
• E)II and IV only

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Definitions:

Frenetic, Manic Activity

Intense, high-energy behavior that may be erratic or hyperactive, often seen in mania.

Distress

Extreme anxiety, sorrow, or pain, often affecting a person’s mental or physical health.

Abnormal

Deviating from what is considered normal or typical, often in reference to behavior or physical conditions.

Danger To Self

A situation or state in which an individual poses a significant risk of harm to their own health, life, or well-being.